Minimum prices paid for Oregon hazelnuts have edged up only slightly from last year, though experts say a substantial upswing is likely due to global market conditions.

Farmers will be paid at least 45 to 55 cents per pound for hazelnuts harvested in 2023 under the deal recently negotiated between packers and the Hazelnut Growers Bargaining Association.

That price range could have been higher if not for a payment change announced by the Hazelnut Growers of Oregon cooperative, which isn’t a party to the negotiations, said Terry Ross, the bargaining association’s executive director.

“It pulled 5 cents off the initial price, right off the top,” Ross said.

Varieties with the highest “crack out” ratio, or the percentage of the shell occupied by the kernel, will fetch at least 55 cents per pound.

A middle tier of cultivars will receive at least 50 cents per pound, while at least 45 cents per pound will be paid for those with lower crack out ratios, including hazelnuts commonly sold in-shell.

Last year, initial hazelnut prices ranged from 40 to 53 cents per pound.

Hazelnut Growers plan

The Hazelnut Growers of Oregon cooperative recently announced that it will pay farmers an “advance” of 30 cents per pound in mid-November to help offset their expenses, regardless of market conditions. Later payments in December, April and July will compensate growers for the crop’s full market price.

However, Chinese hazelnut buyers believe the 30 cent per pound advance “signaled weakness in our position” and have refused to entertain the hazelnut industry’s push for higher prices, said Ross of the bargaining association.

China is a major consumer of in-shell hazelnut varieties with lower crack out ratios, which command lower prices. Though Oregon has grown less dependent on the Chinese market, it’s still an important component in determining prices.

Packers wanted Chinese buyers to pay 95 cents per pound of hazelnuts this year, compared to 75 cents per pound for last year’s crop, but their arguments were undermined by the cooperative’s announcement, Ross said.

“It caused the buyers in China to revert back to last year’s ending price, which was substantially lower than what the market was starting to become,” he said.

Hazelnut Growers of Oregon disagrees with claims the market was adversely affected, as it hasn’t heard any Chinese buyers reference the 30 cent per pound advance, said Ryan Flaherty, the cooperative’s grower relations manager.

The mid-November advance is only meant to provide farmers with cash flow immediately after harvest, Flaherty said. Market conditions won’t be reflected in payments to growers until mid-December, based on the cooperative’s sales.

“Our position is the 30 cents is a market advance. That’s not tied to any market,” he said.

Global market

Neither the cooperative’s advance nor the bargaining association’s initial price ultimately reflect global market conditions for hazelnuts, but act as a risk management strategy for farmers, said Larry George, president of the George Packing Co.

However, the cooperative has traditionally represented the initial price as the basis for hazelnut prices in China, so buyers in that country are now taking that same approach to its 30 cent advance, he said.

“It’s just being used as a leverage point. HGO is being bitten by the rhetoric it’s used for years in China,” George said. “Maybe this is an opportunity to get all Oregon sellers on the same page in explaining the Oregon market to the Chinese.”

The bargaining association wanted packers to agree to an initial price that was 5 cents per pound higher, but the cooperative’s announcement created risk and instability regarding in-shell hazelnuts sold to China, he said. “The Chinese now are not buying. They are waiting.”

Since packers don’t know what ultimate impact China’s “slow walking” will have, they could not commit to the higher minimum price, he said. That’s due to the short time window for sales to China, which typically consumes in-shell hazelnuts during its New Year festivities.

Even so, Oregon’s hazelnut industry has eliminated its surplus inventory, which bodes well for prices rising well above the minimum level, George said.

“I’m actually very encouraged by this market,” he said. “I feel like we have our feet under us and are gaining traction.”

On that point, at least, the bargaining association and the cooperative are in agreement.

With hazelnut production lower than originally expected in the critical Black Sea region, it’s likely farmers will eventually see “double digit bonuses,” Ross said. “We anticipate significant improvement in pricing as the year goes on.”

Flaherty of HGO was likewise optimistic about the outlook for the 2023 crop.

“We’re actually seeing prices improve on the international market and here domestically, and that’s particularly for kernels,” he said.

Hazelnut cooperative overhauls payment strategy